Test 6

A  Alan Greenspan

B  Ben Bernanke

C  Janet Yellen

D  Jerome Powell

A  an increase in the federal funds rate and a decrease in the money supply

B  a decrease in the federal funds rate and an increase in the money supply

C  an increase in the federal funds rate and an increase in the money supply

D  a decrease in the federal funds rate and a decrease in the money supply

A  tax rates

B  the imports of the economy

C  investment spending

D  government spending

A  buying government securities and lowering the reserve ratio

B  selling government securities and lowering the discount rate

C  buying government securities and lowering the discount rate

D  selling government securities and raising the discount rate

A  a restrictive monetary policy

B  a discretionary fiscal policy

C  a prime interest rate policy

D  an expansionary monetary policy

A  the Federal Reserve charges for short-term loans to commercial banks

B  banks charge for loans to the most creditworthy customers

C  banks charge for overnight use of excess reserves held at the Federal Reserve banks

D  is charged for government bonds sold in the open market operations of the Federal Reserve

A  changes required reserves to excess reserves

B  decreases the discount rate

C  increases the discount rate

D  increases the amount of excess reserves banks must keep

A  interest on reserves

B  open-market operations

C  the discount rate

D  the reserve ratio

A  The total demand for money is inversely related to the interest rate.

B  Bond prices and the interest rate are directly related.

C  A lower interest rate raises the opportunity cost of holding money.

D  The supply of money is directly related to the interest rate.

A  Congress of the United States

B  Internal Revenue Service

C  Federal Reserve

D  U.S. Treasury

A  provide the means by which checks drawn on the commercial bank and deposited in other commercial banks can be collected

B  protect the deposits in the commercial bank against losses

C  add to the liquidity of the commercial bank and protect it against a “run” on the bank

D  provide the Fed with a means of controlling the lending ability of the commercial bank

A  issuing receipts for the gold stored with them

B  issuing paper money in excess of the amount of gold stored with them

C  accepting deposits of gold for safe storage

D  using deposited gold to produce products for sale to others

A  set up the Troubled Asset Relief Program (TARP)

B  set up the money market investor funding facility (MMIFF)

C  set up the commercial paper funding facility (CPFF)

D  set up the primary dealer credit facility (PDCF)

A  overestimating the expected profits made by oil companies

B  understating the benefits of devaluing the U.S. dollar

C  overstating the moral hazard problem

D  underestimating the risk of losses on mortgage-backed securities

A  handling the Fed’s collection of checks and adjusting legal reserves among banks

B  setting the Fed’s monetary policy and directing the buying and selling of government securities

C  acting as the fiscal agent for the federal government and issuing currency

D  supervising the operation of banks to make sure they follow regulations and monitoring banks so they do not engage in fraud

A  federal government as does the U.S. Treasury

B  the public as do commercial banks and thrifts

C  commercial banks and thrifts as does the Federal Deposit Insurance Corporation

D  commercial banks and thrifts as those institutions do for the public

A  privately owned and controlled

B  publicly owned but privately controlled

C  publicly owned and controlled

D  privately owned but publicly controlled

A  uses price and wage controls

B  employs fiscal policy

C  controls the money supply

D  buys corporate stock

A  decrease the conversion of money to gold

B  decrease the use of money as a medium of exchange

C  increase the purchasing power of money

D  increase the use of money as a measure of value

A  16.67%

B  25%

C  14.14%

D  20%

A  token money

B  debts, or promises to pay

C  legal tender

D  assets of the Federal Reserve Banks

A  the willingness of banks and the government to surrender something of value in exchange for money

B  the gold bullion that is stored in Fort Knox, Kentucky

C  the belief of holders of money that it can be exchanged for desirable goods and services

D  the confidence of the public in the ability of government to pay off the national debt

A  No, because they provide a short-term loan to cardholders from a financial institution that issued the card.

B  No, because the card transactions are not insured by either the Federal Reserve banks or the U.S. Treasury.

C  Yes, because their value is included in the calculation of M 1.

D  Yes, because their value is included in the calculation of M 2.

A  legal tender

B  fiat money

C  token money

D  a medium of exchange